Key Stats for Copart Stock
- Earnings Reaction: -3.11%
- Current Price: $36.48
- Valuation Model Target: $48.85
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What Happened?
Copart, Inc. (CPRT) shares edged lower following its fiscal second-quarter earnings release, dropping 3.11% on its reporting date to close at $36.48.
The global online vehicle auction company reported a rare double miss compared to Wall Street expectations.
Revenue came in at $1.12 billion, missing the consensus estimate of $1.15 billion.
Adjusted EPS was $0.36, falling short of the $0.39 expected by analysts.
The primary driver behind this softer performance is a temporary decline in auto insurance claims activity.
As inflation continues to squeeze household budgets, many consumers have opted to drop their collision coverage or raise their deductibles.
Consequently, when minor accidents occur, fewer claims are filed, leading to a temporary reduction in the number of vehicles entering Copart’s salvage pipeline.
Global insurance units declined 9.3% for the quarter, or 4.1% when excluding the effect of catastrophic storm units from the prior year.
However, management emphasized that these consumer behaviors are cyclical, whereas the underlying trend of increasing total loss frequency remains a powerful secular tailwind.
In the United States, total loss frequency reached 24.2% in the fourth quarter of 2025, up significantly from 15.6% a decade ago.
Modern vehicles are packed with expensive technology, such as forward-facing sensors, cameras, and specialized bumpers.
This complexity makes modern vehicles increasingly costly to repair and far more likely to be deemed a “total loss” by insurance carriers.
See analysts’ growth forecasts and price targets for Copart stock (It’s free!) >>>
Is Copart Undervalued Today?
The TIKR Model indicates that the market is over-indexing on temporary cyclical dips in claims volume while undervaluing Copart’s structural moats and aggressive technology investments.
The model projects a target price of $48.85, representing a solid 33.9% upside from current levels.
During the earnings call, CEO Jeff Liaw explained how the company’s superior auction returns actively influence industry metrics and drive long-term business.
Liaw stated verbatim: “Our strong returns are literally one of the critical drivers of rising total loss frequency in the industry.”
He also highlighted Copart’s aggressive internal deployment of artificial intelligence to widen its competitive lead.
Liaw added verbatim: “We also know that artificial intelligence will enhance the value proposition we can deliver to sellers and buyers at our marketplace over the long haul.”
Read the full Copart Transcript on TIKR to see the revenue breakdown >>>
Valuation Deep Dive
The TIKR Advanced Valuation Model identifies Copart as a highly defensive compounder trading at a temporary discount due to lagging insurance cycles.
- Target Price: $48.85
- Current Price: $36.48
- Annualized Return: 6.8%
The Liquidity Moat: Copart operates a two-sided marketplace where immense liquidity continuously attracts new sellers. By migrating to an online-only model over two decades ago, the company has built a massive international buyer base. This scale ensures that every damaged vehicle consistently finds its highest and best use globally, resulting in U.S. insurance Average Selling Prices that increased 6% year-over-year.
A Fortress Balance Sheet: The company ended the quarter with an exceptionally strong liquidity position of approximately $6.4 billion, including $5.1 billion in cash and zero debt. This pristine balance sheet allows Copart to aggressively purchase the physical real estate needed for its salvage yards, securing long-term capacity that competitors cannot easily replicate. It also enabled the company to opportunistically repurchase over 13 million shares for $500 million fiscal year-to-date.
Conclusion: A structural monopoly navigating a cyclical dip. With a projected 33.9% total return potential, Copart offers investors a rare opportunity to acquire a high-quality compounder at a discount. The path to $48 is secured by rising total loss rates, a fortress balance sheet, and unmatched global marketplace liquidity.
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How Much Upside Does Copart Stock Have From Here?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
